Know Your Tax Position – Presentation and Q&A Session

The meeting held on 29th August provided ex-pats and visitors with an opportunity to get to know the Turkish tax system.

Mugla Vergi Dairesi Baskangli (The local tax man) held a presentation all about the Turkish tax system Wednesday 29th August in the plush air conditioned Esnaf Oda just down from Migros. Over 30 ex-pats attended along with the usual press pack which this time, fortunately, didn’t out number us all. The event was chaired by the Serder Aksoy Head of Tax in Mugla. Also in attendance were area governor (Kaymakami) Hasan Karakas and the Honary British Consul Mustafa Sikman who helped to clarify some of the questions and answers.

A 10 page guidebook in English detailing the rules all about income declaration for non resident visitors in Turkey was handed out and formed the basis of the presentation (A web version is also available here). The excellent booklet is a ‘must read’ for any UK tax payer who owns property in Turkey and or generates an income from it. It runs through the rules about how, when and where to declare rental income, the amounts that can be offset against tax (deductibles), the rates at which tax is payable and includes helpful examples of how to carry out the calculations.

At the end of the presentation the floor was opened up for questions about the booklet and any other tax questions.

Fethiye Times was first to raise their hand and was followed by others with questions ranging from capital gains tax to taxi fares, yes taxi fares from Dalaman airport to Fethiye!

All in all it was a very informative meeting and was well received by those attending. The chair thanked us for all attending and said that he is always available to answer any tax questions foreigners may have. The Kaymakam also thanked everyone for attending and said that his door is always open to anyone who may have a problem. He wants Fethiye to be a great place to live whatever your nationality and he will do everything he can to help.

A summary of the Q&A’s are shown below. Please note that we cannot guarantee the accuracy of the information shown as we can only write our notes so fast and, due to translation or understanding, we may have missed some important information. Therefore, you should always seek advice from the Tax office or a tax accountant.

Q&A Session

Q: Do you have any other tax guides in English?

A: Yes, please take a look at our website or alternatively if you have any questions regarding Turkish tax please ring me Serder Aksoy, Baskan on 0252 214 4585. Please don’t contact the local Maliye office as they don’t speak English.(Editor note: We checked the http://www.mvdb.gov.tr site but couldn’t find any information in English. If you would like a copy of the booklet contact him – he speaks excellent English)

Q: The presentation today has been about the potential tax liability for ‘Non Resident’ people, but what about the tax liabilities of those who are ‘Resident’ i.e. they have a residence permit?

A: The rules are the same for resident and non resident people however resident people must include all of their worldwide income on a tax return completed via the Turkish tax system. A non resident would include any income they make on the tax return in their own country. For example a UK tax payer would include the tax they may pay on rental income in Turkey on their UK tax return. A dual taxation agreement between the UK and Turkey means the tax payer won’t pay tax twice.(Editor note: We asked this question to see if there was any tax benefit to being resident or non resident)

Q: Is an overseas pension taxable in Turkey?

A: Pension payments are not taxed in Turkey. You will need to seek professional advice in your own country as to whether your pension is taxed at source or whether becoming a resident of Turkey means you can opt to have pension payments made gross.(Editor Note: This is a very interesting subject and is worth researching further if you plan to retire to Turkey. You could make significant savings on your potential tax bill and increase your effective pension.)

Q: With many Turkish holiday home owners carrying out transactions outside of Turkey, what controls do you have in place to ensure that all tax is declared in Turkey?

A: We work on the principles of intention and responsibility and that all people will pay the tax owed. However, we do carry out regular checks to identify tax cheats. For example, we recently carried out a survey at Bodrum airport. It looked like a holiday satisfaction survey but we asked people to let us know where they stayed, if they rented and if so through whom. We are now in the process of analyzing this information and will follow up any issues as they arise.(Editor note: FT believes that a similar exercise was carried out at Dalaman airport in May but this wasn’t mentioned)

Q: If we sell our house within the 4 year period for capital gains tax how much will we have to pay?

A: The first thing to note is that any property purchased since 2007 is now subject to a 5 year period rather than the previous 4. Any property sold within the capital gains period will attract tax payable based on the difference between the purchase and selling price less the stated inflation index for the period. The tax rates are those stated in the booklet. Please also note that the sale of more than one property in any tax year is subject to the business rate of taxation.

Q: Leading on from the above question we asked does capital gains apply if the property is your sole and main residence?

A: Yes, tax is payable on any property sale within the period. In Turkey there is no exemption as there is in the UK tax system.

Q: When I purchased my property the value shown on the Tapu was different to the total sum paid. I therefore believe that the builder may have under declared income and paid less tax. What should I do about this?

A: We recognize this is a problem not only for foreign purchasers but also Turkish purchasers and we are working to introduce a new national solution. The reason this problem arises is that we use the Tapu value to identify the tax liability. However, the Tapu value is determined by the vendor and the local council and this usually differs from the actual purchase price. If you want to discuss further please contact him (Serder Aksoy, Baskan on 0252 214 4585)

Q: A taxi from Dalaman domestic terminal to Fethiye costs 75YTL but a taxi from the International terminal to Fethiye costs £100. I don’t expect you to give me an answer on this but I would like you all to know that this is very unfair.

A: We will speak to the governor of the area and address this inequality.

Timetable of our yoga classes from 1st July onward. Please let us know in advance the classes you wish to attend. We are always delighted to see you in the class. Please contact us for more information. Notes for yoga[...]

Come along to a very special Cheese & Wine evening at the Yakamoz Hotel. Enjoy the mouthwatering combination of cheese and wine in this idyllic location. A selection of Tangala and Turkish cheeses[...]